Although I have a son and daughter at the tail-end of the much-maligned demographic group, Millennials (current age 18 to 33), they’re still a bit of a mystery to me.

The common perception of this “coddled” generation is that they’re obsessed with social media and technology, are in no hurry to grow up and move out of the house, have shelves groaning with trophies just for showing up, and want a life of meaning rather than work.

Whether or not there’s truth to this is beside the point.

What really concerns me is that this age group strongly prefers investing through exchange-traded funds (ETFs) rather than through good old fashioned stock-picking.

And now, adding insult to injury, Global X has filed with the SEC for a Millennial ETF that tracks a basket of stocks operating in sectors popular among Millennials. These include social media, digital media, ecommerce, mobile technology, travel and leisure, and the “sharing” economy.

Global X is a leader in developing theme-based ETFs such as the popular Global X Social Media ETF (SOCL), which has garnered over $100 million in assets. It also launched some duds such as the Global X Fishing Industry ETF (FISN) and the Global X Waste Management ETF (WSTE).

It’s still not known which companies will make it into the Millennial ETF basket, but we can guess at the usual suspects. Likely candidates are companies such as Apple Inc. (AAPL), Twitter Inc. (TWTR), Netflix Inc. (NFLX), Fitbit Inc. (FIT), Facebook Inc. (FB), Nike Inc. (NKE), and Costco Wholesale Corp. (COST).

Global X must be thinking that Millennials will invest in this ETF because they’re familiar with the companies in the basket. I think they’re smart enough to know that they can do much better with a more focused strategy.

Let me explain how I think ETFs should be used as part of an overall investment plan for younger investors…

For background, I should tell you that I’m a bit of an “expert” on exchange-traded funds, having published an ETF newsletter with Forbes for several years, and authoring two books on ETF investing.

ETFs are just a basket of particular stocks – nothing more and nothing less. Their key advantage is that they have very low expenses and are more tax-efficient relative to actively managed mutual funds.

In addition, competition and innovation have led to an explosion of variety and choice, giving investors access to new asset classes and markets.

I suggest you take what I call a “core and explore” strategy to protect and build wealth.

Your core portfolio should be a well-diversified group of ETFs with exposure to U.S. stocks and a variety of asset classes. You can see an example in one of my previous articles outlining the Blackthread Endowment Portfolio as a starting point.

Also keep some cash aside in your explore portfolio with the goal of capital appreciation. Stock picking will drive this portfolio, so try to keep your powder dry until the stocks are on sale.

With the major pullbacks we’ve seen recently, now is a great time to act. But be selective and search for value.

If you particularly like a company in the Millennial ETF such as Apple, pick it up now while it’s trading at less than 10 times earnings and hold on through the dips. Remember, time is your ally.

To sum up, build a strong core and a smart growth portfolio. Good things will happen over time.

Good investing,

Carl Delfeld

Carl Delfeld is a Managing Partner with Chartwell Partners and the Publisher of the Asia Tactical Portfolio. He was a diplomat, Republican strategist, investment banker, venture capitalist, U.S. Treasury consultant, and Forbes Asia columnist. Learn More >>

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